Oil rally causes renewed vigour in markets

The markets are looking fresher this morning as oil rallied to stabilise just above the $70 per barrel, allowing the global indices to right themselves after a turbulent start to the week yesterday.

With oil growing and the index’s energy companies recovering slightly, the FTSE was allowed the space to wipe off its heavy oil coat and open this morning at 6688.3, after closing Monday down at 6658.8. Following this positive open, the UK posted its construction PMI, which came in lower than expected at 59.4. However the renewed strength of its energy companies compensated for this weak construction data.

The DAX was less shaken by OPEC’s decision than its UK counterpart, and, after a slight fall on Friday, closed out Monday positively, reaching 9953 by the end of the day, and opening this Tuesday at 9976.8. However, whilst the German index continued to perform strongly, the euro regressed against the dollar, losing the ground it had gained in yesterday’s US market slump.

Oil’s rally was unable to prolong the Dow’s record run, as it closed at 17769.5, compared to last Friday’s close of 17822.5. This came after news of a weaker than forecast Black Friday, and the fears that Cyber Monday could be afflicted with the same lack of consumer confidence that plagued the post-Thanksgiving retail phenomenon. If Cyber Monday figures come in at better than expected, the US markets could have a return to form, and relegate yesterday’s slump as a minor blip in an excellent end to 2014. 

Despite Japan’s credit rating being downgraded yesterday, and average year on year cash earnings growth falling to 0.5% from 2013’s 0.7%, the Nikkei managed to open and close at a 2014 high today, closing at 17782.5 after reaching a peak price of 17797.5. However, this bullish sentiment had no effect on the yen, which is still struggling against the dollar. The greenback has shown no real signs of falling off against the Japanese currency since its early November surge. The USD/JPY is perpetually stabilising around 118, making brief stabs at 119 but so far failing to break the 120 barrier.

Finally, after a rally yesterday afternoon that led it to close above the $1200 per ounce mark at $1211.15, gold opened lower on Tuesday morning at $1205.35. The metal then slipped even further to drop to $1194 as the commodity yet again failed to make consistent gains. With the dollar revitalised this morning, gold lost whatever vigour it had found yesterday. The metal is once again out in the cold as the dollar remains the preferable investment.